2014 ISDA Credit Derivatives Definitions
A Jolly Contrarian owner’s manual™
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Section 2.11 in a Nutshell™
Use at your own risk, campers!
Full text of Section 2.11
|Section 2.11 Substitution Event
- (a) “Substitution Event” means, with respect to the Non-Standard Reference Obligation:
- (i) the Non-Standard Reference Obligation is redeemed in whole;
- (ii) the aggregate amounts due under the Non-Standard Reference Obligation have been reduced by redemption or otherwise below USD 10,000,000 (or its equivalent in the relevant Obligation Currency, as determined by the Calculation Agent); or
- (iii) for any reason, other than due to the existence or occurrence of a Credit Event, the Non-Standard Reference Obligation is no longer an obligation of the Reference Entity (either directly or as provider of a guarantee).
- (b) For purposes of identification of the Non-Standard Reference Obligation, any change in the Non-Standard Reference Obligation’s CUSIP or ISIN number or other similar identifier will not, in and of itself, constitute a Substitution Event .
- (c) If an event described in Sections 2.11(a)(i) or (ii) has occurred on or prior to the Trade Date, then a Substitution Event shall be deemed to have occurred pursuant to Sections 2.11(a)(i) or (ii), as the case may be, on the Trade Date.
Content and comparisons
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2.11 If you are in Standard Reference Obligation world you do not need to worry about what happens if your ref obligation goes away because The System will sort it out for you. If you are going properly commando and have chosen your own Reference Obligation you may need this.
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